The Sale Process
Here are some tips on selling your home:
1. Prepare A Contract For Sale
A residential property must not be advertised for sale until a Contract of Sale has been prepared.
The Contract must contain certain documents including a copy of the title documents, drainage diagram and a current Zoning Certificate (s 149) issued by the local council.
If the property for sale has a swimming pool or spa pool, a copy of either of the following must also be attached to the contract from 29 April 2016:
a valid swimming pool Certificate of Compliance, or
- a relevant occupation certificate (less than three years old and that authorises the use of the swimming pool) and a valid certificate of registration showing that the swimming pool has been registered.
If a Vendor fails to attach either of these documents to the sales contract, the purchaser may be entitled to rescind the sales contract within fourteen (14) days of exchange, unless settlement has already occurred.
Property exclusions must also be included and a statement of the buyer’s cooling-off rights must be included in the Contract. The draft Contract must be available for inspection at the agent’s office before any advertising can occur. It is important that you consult Kreisson Legal about preparing the contract to make sure that everything is in order before you go to the expense of marketing the property.
2. Engage An Agent
If you use a real estate agent to sell your home you are employing them to work for you. You will sign an agency agreement with them which is a legally binding contract and pay them a fee, usually in the form of a commission.
Once you choose an agent you will sign an agency agreement. By law an agent must give you information about the different types of agreements so you can decide which one is right for you. Agents must give you a Fair Trading fact sheet called Agency agreements.
Do not sign an agency agreement before you understand what it means for you in terms of cost and what the agent is committing to do for you. If there’s anything you don’t understand, contact Kreisson Legal if you need any aspect clarified. .
You can cancel an agency agreement during a one (1) day cooling-off period which starts from the day the agreement is signed. This must be done in writing and be sure to keep a copy.
3. Private Treaty or Auction
There are two (2) main ways of selling a residential property. Either by private treaty or by auction.
When you sell your home by private treaty, you set a price and the property is listed for sale at that price. In general, the price is negotiable with the seller often asking a higher amount than they expect to sell the property for, and the buyer making an initial offer much lower than the asking price.
Selling privately is often just as tense as a public auction, and you will be faced with important decisions when you are presented with offers which are lower than your asking price.
You should also be aware that when a property is sold by private treaty, the buyer has a five day cooling-off period during which they may withdraw from the sale. This can be waived by the provision of a section 66W certificate provided by the Purchaser’s solicitor.
To sell by Auction, the amount you want for the property is not generally revealed to potential buyers who are encouraged to attend the auction and bid for the property against other potential buyers.
Auctions have become an increasingly popular way to sell or buy residential property, but before you decide to go down that path, do your homework and familiarise yourself with the process and what it involves.
The reserve price is the lowest amount you are willing to accept for your property. Before bidding begins, advise your agent what you nominate as the reserve price. This is usually not told to the prospective buyers.
If the highest bid is below the reserve price, the property will be ‘passed in’. You will then either try and negotiate a price with interested bidders or put the property back on the market.
If the bidding continues beyond the reserve price, the property is sold at the fall of the auctioneer’s hammer.
The successful bidder must sign the sale contract and pay you a deposit on the spot, usually ten percent (10%). There is no cooling-off period for anyone who buys a property at auction. If the property is passed in at auction but contracts are exchanged on that same day, the cooling-off period still does not apply.
4. Exchange, Deposit and Cooling off period
Exchanging sale contracts is the legal part of selling a home and happens regardless of whether you sell your property by private treaty or auction.
The contract exchange is a critical point in the sale process. Neither the Vendor nor the Purchaser is legally bound until signed copies of the Contract are exchanged and the deposit has been paid.
There will be two (2) copies of the Contract: one for the Vendor and one for the Purchaser. Each party signs one copy before they are swapped or ‘exchanged’. This can be done by hand or post and is usually arranged by Kreisson Legal or the agent.
At the time of the exchange, the buyer will be required to pay a deposit, usually 0.25% of the purchase price on exchange and the balance of the ten percent (10%) before the end of the cooling off period.
Buyers of residential property usually have a cooling off period of five (5) working days following the exchange of contracts during which they can withdraw from the sale.
The cooling off period can be waived, reduced or extended by negotiation. There is no cooling off period for Vendors. Once contracts have been exchanged, sellers are generally bound to complete the agreement.
There is no cooling off period when purchasing at auction.
If the agent arranges exchange of contacts, the agent must give copies of the signed contract to each party or their solicitor or conveyancer within two (2) business days.
Settlement is the conclusion of the sale transaction and usually takes place about six weeks after contracts are exchanged. It is where the title is transferred into the Purchasers name and the funds are handed over to the Vendor.
PEXA is an electronic platform for solicitors and financiers to undertake Settlements online.
Traditionally Settlements required the exchange of physical documents at a specific time which leaves considerable opportunity for error to occur. Interruptions in the process such as these delay proceedings and typically result in increased workloads for all parties involved.
PEXA aims to provide an efficient and accessible tool for solicitors to conduct Settlements without being tied down with paper, and optimistically avoiding basic and preventable errors tied to pen and paper settlements.
PEXA is an opt-in subscription based platform. There are high hopes for the success of PEXA, the Chief Executive Officer of PEXA, Marcus Price, predicts that 85% of property transfers will be completed through the PEXA platform by 2019. The financial side of the settlements is over seen by the Reserve Bank of Australia.
Kreisson Legal offers PEXA as part of our services to improve security and simplicity to your property transactions.
The contents of this article do not constitute legal advice and should not be relied upon as such.
The Property Team